Correlation Between International Lithium and Elcora Advanced
Can any of the company-specific risk be diversified away by investing in both International Lithium and Elcora Advanced at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining International Lithium and Elcora Advanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Lithium Corp and Elcora Advanced Materials, you can compare the effects of market volatilities on International Lithium and Elcora Advanced and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in International Lithium with a short position of Elcora Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Lithium and Elcora Advanced.
Diversification Opportunities for International Lithium and Elcora Advanced
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between International and Elcora is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding International Lithium Corp and Elcora Advanced Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elcora Advanced Materials and International Lithium is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on International Lithium Corp are associated (or correlated) with Elcora Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elcora Advanced Materials has no effect on the direction of International Lithium i.e., International Lithium and Elcora Advanced go up and down completely randomly.
Pair Corralation between International Lithium and Elcora Advanced
Assuming the 90 days horizon International Lithium is expected to generate 1177.37 times less return on investment than Elcora Advanced. But when comparing it to its historical volatility, International Lithium Corp is 42.97 times less risky than Elcora Advanced. It trades about 0.02 of its potential returns per unit of risk. Elcora Advanced Materials is currently generating about 0.45 of returns per unit of risk over similar time horizon. If you would invest 1.82 in Elcora Advanced Materials on November 28, 2024 and sell it today you would earn a total of 7.18 from holding Elcora Advanced Materials or generate 394.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 94.54% |
| Values | Daily Returns |
International Lithium Corp vs. Elcora Advanced Materials
Performance |
| Timeline |
| International Lithium |
| Elcora Advanced Materials |
Risk-Adjusted Performance
Very Strong
Weak | Strong |
International Lithium and Elcora Advanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Lithium and Elcora Advanced
The main advantage of trading using opposite International Lithium and Elcora Advanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Lithium position performs unexpectedly, Elcora Advanced can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Elcora Advanced will offset losses from the drop in Elcora Advanced's long position.| International Lithium vs. Decade Resources | International Lithium vs. Silver Spruce Resources | International Lithium vs. Grid Metals Corp | International Lithium vs. Canada Rare Earth |
| Elcora Advanced vs. Ceylon Graphite Corp | Elcora Advanced vs. Syrah Resources Limited | Elcora Advanced vs. Graphex Group Limited | Elcora Advanced vs. Lynas Rare Earths |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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